Taxation Dubai: Guide To Expat Tax In The UAE | Ai Investment

The UAE (The United Arab Emirates) consists of seven emirates, Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain. All of the emirates have autonomous and local governments, which control the tax for their respective locations. For expats, tax affairs can be even more complicated and difficult to navigate.

A common misconception for British expats, is to assume when they first consider moving to the UAE that they are instantly exempt from UK tax. The tax requirements for UK expats are unfortunately not that straightforward.

Tax considerations for British expats in Dubai

If you are looking to move from the United Kingdom, to the United Arab Emirates, you will have to consider how your tax situation will be changing. The UK has a double taxation agreement with the UAE. This is something we are able to give you professional and tailored advice on should you be considering moving to the UAE or are based here already.

As every Emirate is autonomous, where you are planning to move can impact your taxes. In most parts of the UAE, there is no income tax on salaries or wages. This differs from the UK entirely as when working in the United Kingdom, you will find that you have to pay an income tax starting at 20% of any earnings above £12,500 a year. 

Whilst you can earn a wage levy-free in the United Arab Emirates, you may find that some services, municipal taxes, goods or custom duties could be taxed. 
If you are looking to open a business after you have relocated to the UAE, you will also find that the corporate tax rate stands at 0 percent. Only large petrochemical businesses and banking institutions are required to pay their corporate taxation. 
Here at Ai Investment Group, we have advisors in Dubai, which can answer questions you may have about relocating, opening a business, income tax or any surrounding areas.

Tax benefits of relocating to the UAE

The United Arab Emirates are known for their tax-free economy and will always be a magnet for expats looking to relocate. Working in any of the seven Emirates can be a great opportunity for anyone looking to grow their personal wealth without the limitations of income tax.
There are many pros to moving the United Arab Emirates regarding general taxation on potential income and business profit. In addition to having no corporate or personal tax, you will also have 100% repatriation of capital and profits, meaning you will own everything you earn. 
If you are relocating to the UAE in order to open a business, the 0% of corporate tax also applies.

Tax considerations for expats in Dubai

Whilst there are many pros surrounding relocating to the UAE, you will also have to consider some of the downfalls. While the United Arab Emirates does not levy an income tax on any of its residents, whether they are expats or citizens, you might be taxed on your business.
If your business is within the finance or petroleum production sector, you could be subject to taxation.
So, before you move, make sure that you contact a UAE based consultant who can help you weigh up the
pros and cons.

Another thing to consider is whereabouts you are in your tax year when you are planning on relocating. When moving to another country indefinitely, you will have to inform your local tax authorities. This ensures that you are taxed correctly in each jurisdiction. 

If you are leaving at the very end of the tax year in your respective country, your move to a tax-free lifestyle will be simple, however, if you are relocating halfway through, you might still have unresolved financial obligations in your home country. This could result in you paying for the remainder of the tax year, even if you are no longer living in the country.



Inheritance tax in Dubai

Many expatriates living in the UAE are unaware that in the absence of a Last Will and Testament recognised by the UAE legal system, the process of transferring assets and wealth management after death can be time consuming, costly and riddled with legal complexities. 

Inheritance simply refers to the assets that an individual leaves to his or her loved ones after  they pass away. An inheritance may contain funds, investments such as stocks or bonds, and other assets such as jewellery, automobiles, art, antiques, and real estate or land. 

At Ai Investment Group, we work with you to oversee and advise you on anything tax related. We always keep in mind your future goals, which permits us to direct your portfolio toward a path that serves both your money related aspirations and your particular direction for living.

Employment tax considerations

Currently, in the UAE, there is no personal income taxation levied on to individual salaries. The UAE provides a unique and lucrative possibility of earning a 100% tax-free wage. 

If you are thinking about relocating to the United Arab Emirates, you will need to consider your employment options. There is no way for foreigners to be granted permanent residency or citizenship, however, expats can receive a three-year temporary visa, which will allow them to live in any of the Emirates long-term without seeking employment straight away. 

Since there is no way for foreigners to receive permanent residency or citizenship in the UAE, there is logically no true Golden Visa. However, through investment into the country, expats can receive 3-year, renewable temporary residency to live abroad long-term in Dubai without having to seek employment.


Healthcare considerations in UAE

Countries such as England are blessed when it comes to having free, accessible healthcare. When you are planning on moving to another part of the world, pinning a local surgery and working out the cost is going to high on your list of priorities. 

Since the 1st of January 2018, the United Arab Emirates have had a zero-percent VAT charge on specific healthcare services.

Specific healthcare services can be defined as the recipient of the supply being the patient that receives the treatment as well. However, if the patient and the recipient of the service are not the same people, the healthcare treatment will be charged at the regular 5% VAT rate.

How religion affects tax in the UAE:
The implications of Sharia Law

In simple terms, Sharia Law is the code that people of the Muslim faith adhere too. This can include a number of subjects which are rooted within the religion, such as prayer, donations and fasting. 
Islam is the official religion of the United Arab Emirates and around 80% of their population follows Sharia Law and its teachings. 

Sharia Law has very strict rules when it comes to making a Last Will and Testament. If you don’t seek advice after a loved one has departed, it could leave you with some unforeseen inheritance tax charges surrounding their death. When creating a will under Sharia law, you will have to follow certain rules such as, a surviving wife is entitled to one eighth of her husband’s estate and a quarter if there are no children or if the deceased has no spouse, father, or children, the mother will receive one half of the estate.

In the United Kingdom, when an individual leaves their estate, whether that be their house, property or belongings, to their spouse or partner, who also lives in the UK, then their estate is exempt of inheritance tax.
However, if a will has been drafted under Sharia law then only a certain amount of the estate will be given to the surviving partner, which could mean that the case is potentially opened up to the possibility of paying inheritance tax on the deceased’s estate. 

If you need any help or advice when it comes to planning your Last Will and Testament or any other tax related concerns, contact one of our advisors in the UAE and we can help.




TESTIMONIALS

Over the past six years, I have maintained and developed a strong relationship with The Ai Investment Group. I have worked in four countries during that period and the guidance I have received has been second to none when it came to planning for my family's future.

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